On January 10, 2012 I wrote a blog titled ‘Hopes for the New Year’. In the blog I laid out my hopes that 2012:
“turns out to be a great year for those in the automotive glass repair and replacement (AGRR) industry (or if great is too high a bar to set at the very least better than 2011)”.
Since we’re nearing the end of the first quarter of 2012 I thought that I’d take a quick look at the first hope I listed for this year. My first hope was regarding the 3 key business drivers for the AGRR industry – weather, the economy and miles drive.
Weather – I had asked for ‘good’ weather for the year. ‘Good’ meaning bad of course. That means snow, hail, and especially ice if you happen to be in the AGRR industry.
As I’m writing this blog watching March Madness the temperatures in Illinois are in the mid 70’s and the sun is shining. Farmers in the Midwest have already been in the fields doing prep work getting ready to plant crops in the near future if the temperatures stay this warm. The lack of a winter in 2011-2012 is discussed in an article titled ‘For much of the USA, winter never got off the ground’ . In the article is a graph that details the year-on-year drop-off in snowfall in major cities across the Northern states. the lack of snowfall is blamed on the location of the jet stream this year to last. For those in the AGRR industry, hopefully it will get back to where it belongs in the 2012-2013 winter season. On a personal level I’ve enjoyed the lack of snow this winter, but from the Upper Midwest to New England the mild winter has forced countless companies to take a hard look at costs they can take out of their businesses. Costs equate to people.
There has been welcomed hail this year in a number of states. This obviously brings glass breakage, but sadly much of that hail came with tornado’s that caused death and destruction as well.
I haven’t talked to anyone in the U.S. who is happy with how this year has started or how they’re doing year-on-year. Regardless of whether they’re a retailer or a supplier it appears that everyone is hunkering down in 2012. The only ones who might have a slight smile are insurers.
It’s not only here in the United States, even the venerable Belron keystone subsidiary in the United Kingdom Autoglass® has had to “slash jobs at its head office and axe 16 out of its 101 branches resulting in a large number of redundancies (lay-offs)“ as reported on February 29, 2012 by the Insurance Times – UK.
The Economy – Indications are that the economic environment is moving in the right direction with the February 2012 unemployed rate down to 8.3% from a high of 9.1% in August 2011 as reported by the U.S. Bureau of Labor Statistics. The Wall Street Journal – MarketWatch.com reports retail sales improving in the first two months of 2012 and home prices and sales are beginning to rise seemingly pointing to a turn-around for the housing market.
All of this is good news if you’re a retailer, but the signs of a recovery could be short lived as Bloomberg reported last Friday that the Thomson Reuters/University of Michigan preliminary index of consumer sentiment fell to 74.3, the lowest this year, from 75.3 the prior month. That means consumers aren’t feeling too confident in the recovery quite yet.
What’s happening on the national economic level is important, but even more important is what’s happening in the local economy in which you operate. What’s the unemployment rate in your market, how are retail sales and are you seeing a recovery in the housing markets? How is your business performing so far in 2012? Feeling good or bad about your prospects?
Miles Driven – Miles driven has shown some minor improvements at the start of the year, but that might be short-lived. In early January Ed Morse, Head of Commodity Trading at Citibank was predicting $ 4 a gallon gasoline as a floor price by the end of May 2012. As of today the average price in the United States for a gallon of gasoline is $ 3.84 as reported by the U.S. Energy Information Administration. A few blocks from where I live in Chicago a BP® gas station is selling regular unleaded gasoline for $ 4.459 a gallon and $ 4.709 for premium.
Recently ExxonMobil’s CEO Rex Tillerson spoke with the TODAY Show’s Matt Lauer and said “Despite rising crude oil prices and threats to stability in the Middle East, the price of gas is unlikely to reach a national average as high as $5 per gallon in the near term”. Well isn’t that comforting news.
Politico recently reported that President Obama’s Energy Secretary Steven Chu was “walking back” his comments in an interview he had with the Wall Street Journal in 2008 when he told the newspaper,
“Somehow we have to figure out how to boost the price of gasoline to the
levels in Europe”.
Really? The prices per gallon in Europe in 2008 averaged over $ 8 per gallon as reported by CNNMoney.com and in 2008 the price for a barrel of oil reached a high of $ 147.27. Today oil is hovering around $ 108 per barrel and the average price per gallon of gasoline in the United Kingdom is over $ 8. Can you imagine what the price per gallon will be if (or when) oil goes higher?
The tensions that continue to build in the Middle East between Israel and Iran obviously add further concern to the price of oil and the gasoline our industry relies so heavily on.
Hopefully all of the key drivers that effect the AGRR industry will all trend positively in the coming months, but with the price of gasoline being such an overriding influencer of both miles driven and the economy even the prospect of future weather events won’t help. What the industry doesn’t need are consumers who become ‘do nothings’ by keeping their hands in their pockets holding onto their cash unsure of what’s coming later this year. If that happens, retailers and suppliers alike will continue to have to make those very hard decisions on what costs to cut next. The first and easiest cuts always involve people.
People are the ultimate key driver to any successful business. Companies that don’t recognize the incredible value that attracting and then keeping the most talented people undoubtedly will suffer when weather, the economy and miles driven have a negative impact on the business. Recognizing that employees are the key driver that helps every organization find ways to innovate, increase customer service levels and create value for all stakeholders will allow it to flourish and remain competitive in the marketplace.
I wrote in a blog earlier this year about the need to ‘Be Smart in 2012’, quoting Coach Pete Carril who said, “The strong take from the weak, but the smart take from the strong”. I hope you’re being smart in 2012.